NBG high frequency estimate of GDP (Q3:2020) | September 2020

GDP increases at a strong monthly pace of 5.5% in July-August, although the flattening of high frequency indicators points to a slowing recovery in September

NBG’s high frequency forecast of Greek GDP growth for Q3:2020 has been updated to include the most recent data that became available in August and September.
According to the latest estimates, the economic recovery continued with monthly (s.a.) GDP growth of 6.0% in July and 4.7% in August following a 14.0% q-o-q (s.a.) decline in Q2:2020 (-15.2% y-o-y), which was very much in line with the forecast derived from NBG’s high-frequency indicators model. On a yearly basis for July, the GDP decline is now estimated at -6.8% y-o-y.
Looking at individual indicators, business turnover contracted by 17.5% y-o-y in July 2020 compared with -25.0% y-o-y in Q2, up by 6.6% on a monthly basis. A delayed opening of the tourism season weighed on the performance of several sectors and especially on manufacturing turnover. On the positive side, the pick-up in tourism in August is expected to support demand and business activity.
The decline in the non-oil trade deficit of 19.3% y-o-y in July (current prices) due to a rebound in non-oil exports of +9.2% y-o-y (+13.1% m-o-m) partly compensated for the drag from lower domestic demand.
August-September high frequency indicators are mixed. On the one hand, mobility trends (including non-residents) and international arrivals showed a further improvement in August (especially in the first half of this month). Encouragingly, the decline in international arrivals at Athens International Airport (AIA) slowed to 66.2% y-o-y in August from -76.1% y-o-y in July and -96.7% in Q2:2020.
On the other hand, economic sentiment stabilized to 90.7 in August, but remains c. 9% below its 6-year average. The improvement in services confidence has been offset by a small deterioration in all other sectoral indicators of the survey in this month. Manufacturing PMI picked up slightly to 49.4 in August (same as in June 2020, with domestic and export orders losing steam m-o-m).
Overall, NBG’s high frequency estimates point to a significant quarterly increase in GDP of c. 8.0% q-o-q, on a seasonally-adjusted basis, in Q3 (-8.4% y-o-y), which implies an average recession in 9M:2020 of c. 8.0%. This outcome would be in line with our baseline estimate for a GDP drop of 7.5% in FY:2020, although deteriorating epidemic trends increase downside risks for the rest of the year.

NBG Economic Analysis forecasts of Greek GDP growth based on high frequency indicators are updated on a regular basis and will be available on the NBG website